REPORT TO THE SUBCOMMITTEE ON
ENVIRONMENTAL POLLUTION
COMMITTEE ON PUBLIC WORKS
UNITED STATES SENATE
Implementation Of Federal
Water Pollution Control Act
Amendments Of 1972 Is Slow ...«,..
Environmental Protection Agency
BY THE COMPTROLLER GENERAL
OF THE UNITED STATES
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COMPTROLLER GENERAL OF THE UNITED STATES
WASHINGTON. D.C. 20348
B-16650S
The Honorable Edmund S. Muskie, Chairman
Subcommittee on Environmental Pollution
Committee on Public Works
United States Senate
Dear Mr. Chairman:
Pursuant to your request of June 29, 1973, this is our report
on the slow implementation of Federal Water Pollution Control Act
Amendments of 1972 by the Environmental Protection Agency.
As agreed to by your office, we are sending copies of this
report to Congressmen John M. Murphy, Vernon W. Thomson,
and Charles A. Vanik after your Subcommittee receives this
report.
We believe that the contents of this report would be of interest
to other committees and Members of the Congress. However, we
do not plan to distribute this report further unless you agree or
publicly announce its contents.
Sincerely yours.
•
Comptroller General
of the United States
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Contents
DIGEST
CHAPTER
1
INTRODUCTION 1
Federal Water.Pollution Control Act
Amendments of 1972 2
Scope of review 2
MANY MUNICIPALITIES UNLIKELY TO
ACHIEVE WATER QUALITY GOALS 3
Impounding funds delayed construction
of projects in New York 4
Awarding of construction grants slowed 7
Federal funds insufficient to meet
municipalities' needs 10
t
NO EVIDENCE OF FEDERAL-FUNDING
DISCRIMINATION AMONG STATES 11
Purpose of regional obligation goals 11
Administration of obligation goals 12
OBLIGATING CONSTRUCTION GRANT
FUNDS BEFORE APPROVING DESIGN
PLANS NOT CONSISTENT WITH
LEGISLATIVE PROVISIONS 14
Types of construction grants authorized 14
Types of construction grants awarded 17
Legality of Step 2+3 grants 19
EPA BEHIND SCHEDULE IN ISSUING
EFFLUENT LIMITATION GUIDELINES
AND DISCHARGE PERMITS 21
Delayed publication of guidelines 22
Slow progress in issuing permits 25
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CHAPTER
6
8
DELAY IN EFFECTIVE AREAWIDE
PLANNING TO CONTROL WATER
POLLUTION 36
Slow implementation of areawide
management planning 37
Effect on amendments' regulatory
provisions 40
EPA'S ASSESSMENT OF U.S. CONSTRUCTION
CAPABILITY TO BUILD MORE SEWAGE
TREATMENT FACILITIES 43
Review in six States 44
State, local government, and industry
officials' comments 45
CONCLUSIONS, AGENCY AND STATE
COMMENTS, AND MATTER FOR
CONSIDERATION BY THE SUBCOMMITTEE 48
Agency and State comments 50
Matter for consideration by the
Subcommittee 51
APPENDIX
I
II
III
Letter dated June 29, 1973, from the Chairman
of the Subcommittee on Environmental
Pollution, Senate Committee on Public
Works, to the Comptroller General 53
Comparison of EPA's allocation of construction
grant funds to six States with amounts
authorized by the 1972 amendments 57
Comparison of EPA's allocations for fiscal
years 1973-74 with obligations through
December 1973 for constructing sewage
treatment facilities under Public
Law 92-500 58
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Page
APPENDIX
IV Letter dated September 27, 1974, from the
Environmental Protection Agency to the
General Accounting Office 61
ABBREVIATIONS
GAO General Accounting Office
EPA Environmental Protection Agency
NPDES National Pollutant Discharge Elimination System
PS&E plans, specifications, and estimates
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COMPTROLLER GENERAL'S
REPORT TO THE SUBCOMMITTEE ON
ENVIRONMENTAL POLLUTION
COMMITTEE ON PUBLIC WORKS
UNITED STATES SENATE
IMPLEMENTATION OF FEDERAL
WATER POLLUTION CONTROL ACT
AMENDMENTS OF 1972 IS SLOW
Environmental Protection Agency
B-166506
WHY THE REVIEW WAS MADE
GAO was asked to review and
report on Environmental
Protection Agency (EPA) poli-
cies, procedures, and regula-
tions implementing provisions
of the Federal Water Pollu-
tion Control Act Amendments
of 1972.
FINDINGS AND CONCLUSIONS
The 1972 amendments estab-
lished a national goal of eli-
minating discharge of pollut-
ants into navigable waters by
1985 and an interim goal of
providing water quality suffi-
cient for protection and
propagation of fish, shellfish,
and wildlife and for recreation
by 1983.
Many municipalities unlikely to
achieve water quality goals
The 1972 amendments required
grantees to meet many new and
changing requirements. Many
States and municipalities did
not meet EPA's administrative
requirements implementing legis-
lative provisions and conse-
quently were unable to qualify
projects for available Federal
funds.
At the slow pace in which EPA is
awarding Federal grants--$3.2 bil
lion through August 31, 1974—it
is doubtful that many municipali-
ties will achieve secondary
treatment by July 1, 1977, as
required by the amendments.
The President impounded $9 billion
of the $18 billion authorized by
the Congress to be allocated among
States for fiscal years 1973-75
for constructing sewage treatment
plants.
In fiscal year 1973, impoundment
of funds reduced the number of
construction grants that could
have been awarded for projects
ready for construction with State-
approved design plans and specifi-
cations in one of six States--
New York--included in GAO's review.
The President's impoundment could
seriously hamper achieving the
goal of eliminating discharge of
pollutants into navigable waters by
1985 once administrative and legis-
lative requirements are met.
However, funds needed by municipali-
ties to construct facilities eligible
under the 1972 amendments—$60 bil-
lion according to EPA—far exceed the
funds authorized by the amendments.
(See pp. 3 to 10.)
No evidence of funding
discrimination among States
In May 1973, EPA established goals
for its 10 regional offices to obli-
gate $2 billion of the $5 billion
Tear Sheej- Upon removal, the report
cover date should be noted hereon.
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approved by the President to be
allocated to States for fiscal
years 1973-74 to construct sewage
treatment plants. Each regional
office goal equaled the amount
of funds allocated to States in
its region for fiscal year 1973.
These goals were not established
to preclude regional offices
from awarding each State's pro-
portionate share of the $5 billion
allocated for fiscal years 1973-74
and increases to individual
regions were made where appropriate.
(See pp. 11 to 13.)
Obligating construction grant funds
before approving design plans not
consistent with legislative provisions
EPA regulations provide for the
award under certain specified condi-
tions of project grants combining
preparation of construction drawings
and specifications and construction
of sewage treatment facilities.
On July 1, 1974, GAO advised EPA
that combination projects were not
consistent with provisions of the
1972 amendments or its legislative
history and that EPA should revise
its regulations accordingly.
GAO said such grants to which the
Government is already committed
need not be annulled. EPA immedi-
ately instructed all regional
administrators to discontinue
awarding such grants.
(See pp. 14 to 20.)
EPA behind schedule in
issuing effluent^ limitation
guidelines and discharge permits
The 1972 amendments required EPA to
develop and publish by October 18,
1973, effluent limitation guidelines
based on control technology to
serve as a basis for limiting the
amount of pollutants discharged
into navigable waters from
industrial sources.
Guidelines were to be developed
by category of industrial dis-
chargers of pollutants. If using
this control technology does not
achieve water quality standards,
more stringent effluent limita-
tions could be imposed based on
information developed by the
States.
To enforce effluent limitations,
the amendments provide for estab-
lishing a National Pollutant
Discharge Elimination System.
Under this system EPA or States,
with EPA-approved programs, issue
permits to industrial dischargers
setting forth effluent limitation
and pollution abatement schedules.
States without approved programs
are required to review and cer-
tify permits before issuance by
EPA. EPA acted promptly in devel-
oping guidelines but did not meet
the statutory deadline of publish-
ing them primarily because of the
complicated and time-consuming
task involved.
EPA published the guidelines for
the first industrial category in
January 1974 and does not expect
to complete guidelines for all
industrial categories until 1975.
Delayed publication of the guide-
lines did not seriously affect
the number of industrial permits
EPA issued even though relatively
few permits--5,275 out of
27,000—had been issued as of
April 30, 1974.
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Where final guidelines were not
available, permits were issued on
the basis of interim effluent
instructions and/or individual
assessments of the permit appli-
cants' discharges.
Permits issued in this manner for
the maximum 5-year period could
result in some industrial dis-
chargers not meeting the legisla-
tive requirement that industrial
dischargers apply the best practi-
cable control technology currently
available by July 1, 1977.
EPA agreed that permits issued
before final guidelines might con-
tain effluent limitations less
stringent than those subsequently
prescribed in the guidelines but
said that in most cases permits
contained effluent limitations
either equivalent to or more
stringent than those prescribed in
the final guidelines.
EPA also said it opposed modifying
permits on a regular basis because
industrial dischargers will not
proceed with implementation of
permit conditions under the threat
of changing requirements and
direction.
EPA attributed slow progress in
issuing industrial pollution dis-
charge permits to:
—Few States with approved permit
programs, which placed an
administrative burden on EPA
regional offices in issuing per-
mits. Amendments provided that
States could be authorized to
administer the permit program in
their jurisdictions if they so
desired.
-States1 delays in certifying
permits submitted by EPA
regional offices before issuance.
-States' problems in obtaining
information needed to establish
more stringent effluent limita-
tions to meet water quality
standards.
The rate of drafting and issuing
permits needed to be doubled if
they were to be issued to the
27,000 industrial applicants by
December 31, 1974.
Dischargers who have submitted
applications for, but have not been
issued, discharge permits by
December 31, 1974, are no longer
immune from either governmental or
citizen legal actions, even though
EPA or'States with EPA-approved
permit programs were unable to
promptly process their permit
applications. (See pp. 21 to 35.)
Delay in effective gpeawide planning
to control water pollution
Section 208 of the act provided for
developing and implementing areawide
waste treatment management plans and
required EPA to publish applicable
guidelines by January 16, 1973. EPA
did not publish final guidelines
until September 14, 1973.
Because of the act's extended time
frame for States to submit areawide
waste treatment management plans for
EPA's approval, EPA's delayed imple-
mentation of areawide planning will
have a limited immediate effect on
carrying out the act's regulatory
provisions.
Teat Sheet
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EPA's delayed publication of guide-
lines, however, has deferred
designation and approval of
planning organizations. Prepara-
tion and approval of areawide
waste treatment management plans
for areas with substantial pol-
lution problems will be delayed
about a year. This could delay
--implementing areawide waste
treatment management require-
ments for control or treatment
of point and nonpoint sources
of pollution;
—establishing land use require-
ments and controlling the
location, modification, and
construction of discharging
facilities; and
—establishing plans to insure
that industries discharging
into treatment plants meet
applicable pretreatment
requirements.
State officials said they were
either reluctant to designate
section 208 planning agencies or
concerned with problems of imple-
menting areawide planning.
(See pp. 36 to 42.)
EPA'e assessment of U.S. eons-fcruation
capability to build more sewage
treatment facilities
Reversing an earlier finding, EPA
concluded in December 1973 that the
U.S. construction industry should be
able to build the required sewage
treatment facilities without sig-
nificantly contributing to inflation.
Many State, local government, and
construction industry officials
agreed that the construction industry
could meet expanded construction
demands for sewage treatment
facilities. (See pp. 43 to 47.)
AGENCY ACTION AND UNRESOLVED ISSUES
This report was submitted to EPA
and the water pollution control
agencies of the six States included
in GAO's review.
With respect to the termination of
immunity from legal actions after
December 31, 1974, for dischargers
who have applied for, but have not
been issued, discharge permits
because the applications were not
administratively completed, EPA
said
—EPA did not intend to take
enforcement action against such
dischargers.
--EPA intended to discourage such
actions by citizens groups.
—In the opinion of EPA's General
Counsel, a court would not find
a discharger in violation of
the act for failure to have a
permit when the administering
agency has failed to take
action on the permit applica-
tion.
Even though it may be unlikely
that a court would find a dis-
charger in violation of the act,
the discharger could still be sub-
ject to expensive and time-
consuming litigation.
(See p. 50.)
Water pollution control agencies
generally agreed with, the facts
pertaining to the activities in
their States. Comments of EPA
and the State agencies are dis-
cussed in chapter 8.
^^>
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MATTER FOR CONSIDERATION BY the Subcommittee may wish to pro-
THE SUBCOMMITTEE pose amending section 402(k) of
the Federal Water Pollution Control
To discourage the possibility of Act, as amended, to provide that
legal action against a discharger such a discharger shall not be in
who has not been issued a permit by violation of applicable provisions
December 31, 1974, even though he of the act because a permit has
has made proper application for it, not been issued.
Tear Sheet
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CHAPTER I
INTRODUCTION
The Chairman, Subcommittee on Environmental Pollution,.
Senate Committee on Public Works, in a letter dated June 29, 1973
(see app. I), asked us to review certain Environmental Protection
Agency (EPA) policies, procedures, and regulations implementing
provisions of the Federal Water Pollution Control Act Amendments
of 1972 (33 fJ.S.C. 1251).
The Chairman asked us to:
--Determine the effect of municipal sewage treatment
construction grant funding restrictions on the overall
implementation of the 1972 amendments.
--Find out if construction grant funds were being allocated
on a State-by-State basis as required by the act.
--Review and comment on the legality of EPA's policy of
approving and obligating Federal funds for a complete
waste water treatment works project before preparation
of plans, specifications, and estimates.
--Assess EPA's progress in promulgating effluent limitation
guidelines and issuing permits for discharging pollutants
from industrial sources into navigable waters.
—Analyze how EPA's restrained implementation of areawide
waste treatment management will affect the overall operation
of certain regulatory controls contained in the act.
--Ascertain whether the construction industry was capable of
absorbing the $18 billion authorized by the act for constructing
sewage treatment facilities.
Designation changed from the Subcommittee on Air and Water
Pollution in January 1974.
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The Chairman also asked us to review EPA s efforts to
undertake research programs to implement the new concepts
established by the 1972 amendments. Our January 16, 1974,
report entitled "Research and Demonstration Programs to
Achieve Water Quality Goals: What the Federal Government
Needs to Do" (B-166506), covered EPA's research programs.
FEDERAL WATER POLLUTION CONTROL ACT
AMENDMENTS OF 1972
The 1972 amendments established a national goal of
eliminating by 1985 the discharge of pollutants into navigable
waters of the United States and by July 1. 1983, an interim goal
of water quality sufficient for the protection and propagation of
fish, shellfish, and wildlife and for recreation.
The 1972 amendments provided for (1) Federal grants of
75 percent of the costs of constructing publicly owned sewage
treatment works, (2) limiting the amount of pollutants that can
be discharged from point sources, (3) instituting a new permit
system to regulate the amount of pollutants that can be discharged
into receiving waters, (4) developing and implementing areawide
waste treatment management planning processes for those areas
that have major water quality problems because of urban-industrial
concentrations or other factors, and (5) a major research and
demonstration effort to develop technology to eliminate the dis-
charge of pollutants into navigable waters, waters of the contiguous
zone, and the oceans.
SCOPE OF REVIEW
To comply with the Chairman's request, we held discussions
with officials at EPA headquarters in Washington, D.C.; EPA
regional offices in Chicago (region V), New York (region II), and
San Francisco (region DO; and State water pollution control agencies
in Sacramento, California; Springfield, Illinois; Lansing, Michigan;
Trenton, New Jersey; Albany, New York; and Columbus, Ohio. We
also obtained information from other State agencies, municipalities,
and construction industry associations and examined Federal and
State agencies' documents, records, studies, and other literature.
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CHAPTER 2
MANY MUNICIPALITIES UNLIKELY TO
ACHIEVE WATER QUALITY GOALS
The 1972 amendments authorized EPA to allocate $18 billion
to the States--$5 billion, $6 billion, and $7 billion for fiscal years
1973, 1974, and 1975, respectively--to finance 75 percent of the
cost to construct publicly owned sewage treatment plants.
EPA was required to allocate the funds to the States pursuant
to a prescribed ratio by January 1 preceeding the respective fiscal
year, except that the allocation for fiscal year 1973 was to be made
by November 17, 1972. The amounts allocated were to be immediately
available for obligation.
These funds are to help municipalities meet the requirement
to build new sewage treatment plants or to upgrade existing plants
to achieve secondary treatment of waste by July 1, 1977. As
generally defined by EPA, secondary treatment will remove at least
85 percent of the biochemical oxygen demand and suspended solids
from municipal sewage. Projects funded after June 30, 1974, are
required to provide the best practicable waste treatment technology.
On November 22, 1972, the President instructed EPA to
allocate to the States $5 billion--$2 billion for fiscal year 1973 and
$3 billion for fiscal year 1974--of the $11 billion authorized for
constructing sewage treatment plants for fiscal years 1973-74.
Similarly, on January 1, 1974, the President instructed EPA to
allocate $4 billion of the $7 billion authorized for fiscal year 1975
for a total allocation of $9 billion and an impoundment of $9 billion.
The Chairman, Subcommittee on Environmental Pollution, asked us
to determine the effect this impoundment would have on the overall
implementation of the 1972 amendments.
- A measure of the oxygen consumed in the biological processes that
break down organic matter in water. Large quantities of organic
waste require large amounts of dissolved oxygen. The more
oxygen-demanding matter, the greater the pollution.
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In New York impoundment reduced the number of municipal
waste treatment grants that could have been awarded in fiscal year
1973. In the other five States we reviewed, Federal grant funds
were available for all qualified projects. Many States and munici-
palities, however, did not meet the administrative and legislative
requirements of the 1972 amendments, and therefore their projects
did not qualify for available Federal funds.
At the slow pace in which EPA is awarding Federal grants--
$3.2 billion through August 31, 1974--it is doubtful that many
municipalities will achieve secondary treatment by July 1, 1977.
According to EPA, funds which municipalities need to construct
facilities eligible under the 1972 amendments—$60 billion'--far exceed
the funds authorized by the 1972 amendments. Once the administrative
and legislative requirements are met, the President's impoundment
could seriously hamper the progress of many municipalities in
achieving secondary treatment and the goal of the 1972 amendments
of eliminating the discharge of pollutants into navigable waters by
1985.
The Chairman was also concerned that the Office of Management
and Budget might have required EPA to further reduce available
funds for Federal grants for fiscal years 1973-74 from $5 billion to
$2. 1 billion. In a November 23, 1973, letter, we told the Chairman
that no further impoundment had been placed on these funds.
IMPOUNDING FUNDS DELAYED CONSTRUCTION
OF PROJECTS IN NEW YORK
For fiscal years 1973-74, EPA allocated $2.4 billion, or $2. 9
billion less than the $5. 3 billion authorized under the 1972 amendments,
to the six States included in our review. (See app. II. ) Only in New
York were we able to identify.projects ready for construction, with
State-approved design plans and specifications, that could have been
funded in fiscal year 1973 but were not because of the impoundment.
In a preliminary report to the Congress dated September 3, 1974,
EPA said that the States had estimated costs of $115 billion for
treatment facilities and an additional $235 billion for abatement
of storm water pollution.
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New York's project priority list for fiscal year 1973 listed
187 projects estimated to cost about $1. 59 billion, with $1. 19
billion as the applicable 75 percent Federal share. EPA would
have considered all the projects on the priority list for funding
during fiscal year 1973 if the Administration had made available
the entire congressionally authorized $11 billion. Actual
allocations to New York for fiscal years 1973-74 totaled about
$553 million.
Projects considered for funding
EPA considered the allocations sufficient for funding 75
percent of the eligible construction costs of the first 34 projects on
New York's 1973 priority list. The State had estimated that these
projects would cost about $760 million.
New York submitted grant applications for the construction of
18 of the 34 projects. It did not submit grant applications for the
remaining 16 projects because
--6 were technically deficient,
--funds for 3 were to be used to help finance 2 large projects
in New York City,
--1 was incorporated with another project, and
--6 were not ready for construction.
EPA awarded grants of about $221 million for 15 of the projects and
returned grant applications for 3 because they did not meet EPA
requirements v
Projects not considered
for construction grants
New York had an additional 39 projects with State-approved design
plans and specifications ready for construction which were below the
first 34 projects on the 1973 priority list. The estimated construction
costs of these 39 projects totaled about $329 million, of which about
$247 million would be the applicable Federal share.
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New York submitted grant applications to EPA for 15 of the
39 projects estimated to cost about $56 million. EPA returned the
applications without considering them because they could not be
covered with the available allocations without jeopardizing the
funding of projects with higher priorities. The State did not submit
grant applications for the remaining 24 projects, with estimated
costs of $273 million, after EPA's notification that it would return
all applications for projects which were not high enough on the
priority list to be covered by the 1973-74 allocations.
Also, New York did not submit grant applications for major
portions of two large New York City projects ready for construction
because of 4he limited Federal funds. The estimated costs of these
two projects totaled $404 million. The State used a phased
construction approach and submitted applications for Federal grants
totaling $93 million--included in the 15 projects awarded grants of
$221 million—with estimated costs of $124 million. New York does
not expect to submit grant applications for the remainder of the two
projects with estimated costs of $280 million until fiscal year 1975
or later.
•v
State officials told us that New York could have had 11 more
projects ready for construction before June 30, 1973, if the Federal
grants had been available.
Adverse effect of delaying
the funding of 41 projects
New York State officials told us that by delaying the funding
of the 41 projects—39 projects too low on the priority list for funding
plus the 2 large New York City projects—the plans for almost all
the projects may have to be revised before construction can begin
because of changing technical requirements. Also, many munici-
palities will continue to discharge either raw or inadequately treated
sewage.
Of the 15 municipalities whose grant applications were returned
by EPA because the projects were too low on the priority list for funding
— 7 have no treatment facilities and are dumping raw sewage
into receiving waters or into the ground through septic tanks,
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--7 have only primary treatment, and
--1 is providing substandard secondary treatment.
In addition, pending completion of one of the two New York City
treatment facilities, the city will continue to discharge 70 million
gallons of raw sewage daily into the East River.
AWARDING OF CONSTRUCTION GRANTS SLOWED
Through December 31, 1973, EPA awarded 676 grants to
municipalities to construct or upgrade sewage treatment plants
totaling $1. 77 billion--35 percent of the $5 billion allocated for fiscal
years 1973-74. (See app. III.) The grants were awarded
sporadically as shown in the following table.
Amounts of grants
Number of (including subsequent
grants adjustments)
(000 omitted)
February 28 and March 1, 1973 ;43 $ 496,785
April 1973 1 330
May 30 to June 30, 1973 430 1,108,847
July 1973 149 132,327
August to December 1973 53 36, 198
Total 676 $1,774.487
The slow pace in which EPA has been awarding these grants was
caused primarily because of new and changing requirements in EPA's
regulations implementing the following legislative provisions for
awarding construction grants.
The first stage in waste water treatment in which floating or
settleable solids are mechanically removed by screening and
sedimentation.
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User charge system
Section 204(b)(l) of the 1972 amendments specifies that,
effective March 2, 1973, EPA will not approve any grant unless
the applicant (1) has adopted or will adopt a system of charges
to insure that each recipient of waste treatment service will pay
its proportionate share of the cost of the plant's operation and
maintenance and (2) has made provisions to recover from industrial
users their proportionate Federal share of the plant's capital costs.
To preclude a rush of applications before the March 2, 1973,
deadline, EPA established stringent criteria for selecting projects
for funding: (1) projects which would be jeopardized if funding were
delayed after March 1, 1973, because of withdrawal of industrial
sources which were committed to the municipal treatment service
and (2) projects where the applicants had plans and specifications
ready for bidding.
On February 28 and March 1. 1973, EPA awarded 43 grants
totaling about $497 million in 5 of EPA's 10 regions. EPA awarded
only one additional grant of $330, 000 before it published proposed
user charge and industrial recovery regulations on May 22, 1973,
(38 F. R. 13524)--final guidelines were published on August 21,
1973 (38 F. R. 22524). The amendments required EPA to publish
applicable guidelines by April 16, 1973. The short time between
May 22 and July 1, 1973, when additional requirements--establish-
ing new State priority systems and insuring that sewer collection
systems are not subject to excessive infiltration!--would be imposed,
placed a heavy burden on State agencies in preparing grant proposals
and on EPA in reviewing and approving grant applications before
July 1, 1973.
EPA recognized this problem and extended the deadline for
complying with additional requirements to July 31, 1973, for
applications received before July 1, 1973.
Water entering a sewer system through defective pipes, pipe joints,
connections, or manhole walls.
8
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From May 22 to June 30, 1973, EPA awarded 430 grants
totaling about $1. 1 billion, and during July 1973 awarded 149 grants
totaling about $132 million.
Officials in two of the six States told us they had submitted
as many grant applications as possible before July 1, 1973, but
had other projects that could have been submitted if they had had
more time. Officials in one State said that they had submitted
all the projects to EPA that were ready for grants. Shortages of
personnel limited the number of applications two States were able
to submit to EPA. The impoundment of funds delayed construction
of projects in one
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As of December 31, 1973, EPA had approved the priority
lists of 37 of the 56 States and territories covered by the construction
grant program.
FEDERAL FUNDS INSUFFICIENT
TO MEET MUNICIPALITIES' NEEDS
In November 1973 EPA reported to the Congress that munici-
palities would need $60.1 billion to construct sewage treatment and
collection systems to meet the water quality goals established by
the amendments.
Officials in the six States said they were concerned because
Federal funds would not sufficiently meet municipalities' financial
needs for constructing sewage treatment facilities even if the full
$18 billion authorized was allocated to the States.
Officials in the six States said that they did not plan to take
enforcement action against municipal dischargers who fail to meet
the 1977 secondary treatment requirement because of a lack of
Federal construction grant funds.
Officials also said that States or municipalities might be
reluctant to spend funds on planning the construction of projects for
which grants might not be available or which might become obsolete
because of changing technical requirements, such as excessive
infiltration.
Officials of two States said they had limited or proposed to
limit the reserve capacity of sewage treatment plants from a 20- to
10-year growth basis because of insufficient Federal funds.
10
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CHAPTER 3
NO EVIDENCE OF FEDERAL-FUNDING
DISCRIMINATION AMONG STATES
In May 1973 EPA established municipal sewage treatment
construction grant obligation goals for its 10 regional offices to
obligate $2 billion of the $5 billion allocated for fiscal years 1973-74 .,
by December 31, 1973. The amount of each regional office goal
was equal to the sum of the individual State allocations in its region
for fiscal year 1973. EPA told regional administrators that the
obligation goals were regional targets and that distributing funds
among the States was their prerogative.
The Subcommittee Chairman was concerned that EPA's decision
to allocate funds by region, rather than on a State-by-State basis as
required by the amendments, could result in discrimination because
EPA could refuse to fund projects in some States in a region and
could fund projects in others up to their,proportionate shares of the
allocation. However, there was no evidence that the three EPA
regional offices where we made our review discriminated between
States in distributing funds under the established regional obligation
goals.
PURPOSE OF REGIONAL OBLIGATION GOALS
In a teletype dated June 11, 1973, the acting EPA administrator
told the regional administrators that:
--The purpose of the obligation goals was not to control the
pace of the program but was to insure that each region
accurately estimated the planned State obligations consistent
with the requirements of the law and applicable regulations.
--If project needs in a given region required a revision to
the regional obligation goal, a request for such a revision
would be granted as long as adequate estimates were
provided to EPA headquarters.
11
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Subsequently, the EPA administrators of regions I, II, and
X requested, and EPA headquarters granted, increases in their
obligation goals totaling $335, 469, 600.
Region Date of increase Amount
I 6/20/73 $236,046,000
II 6/30/73 34,000,000
7/30/73 25,000,000
X 5/29/73 20,423,600
7/26/73 10,000,000
11/21/73 10,000,000
$335,469,600
As of December 31, 1973, regional obligation goals had been increased
from $2 billion to $2. 3 billion.
In a memorandum to EPA regional administrators dated January 9,
1974, EPA headquarters extended the previously approved regional
obligation goals through January 31, 1974, and established a formal
system for issuing quarterly regional obligation goals. EPA head-
quarters would determine the goals on the basis of regional office
quarterly submissions of State-by-State obligation plans. According to
the memorandum, the regions would need headquarters approval to
exceed the quarterly obligation goal but generally headquarters would
not alter the regional estimates unless they included nonapprovable
projects or were clearly unrealistic.
ADMINISTRATION OF OBLIGATION GOALS
x
Each regional obligation goal, established in May 1973, equaled
the sum of the individual State allocations in that region for fiscal
year 1973. Therefore, if the regional obligation goals were to act
as a constraint, the funding of one State's projects exceeding its
fiscal year 1973 allocation could result in other States' not being
able to obligate funds up to their full fiscal year 1973 allocations.
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In two of the three regions included in our review, Federal
construction grant awards in certain States exceeded the States'
fiscal year 1973 allocations, However, there was no indication
that the EPA regional office had denied grants for projects in
other States because of the grants made in excess of that year's
allocations.
State and EPA regional officials told us that no certified
projects had been denied Federal grants as a result of the May 1973
regional obligation goals.
EPA regional officials said the only limits placed on the
Federal funds available to the States were the limits established in
EPA's grant regulations and the funds were still allocated on a
State-by-State basis. EPA regional officials view the regional
obligation goals primarily as an in-house fund control which could
have been readily increased if the States had submitted acceptable
applications for additional projects.
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CHAPTER 4
OBLIGATING CONSTRUCTION GRANT FUNDS
BEFORE APPROVING DESIGN PLANS
NOT CONSISTENT WITH LEGISLATIVE PROVISIONS
Section 203(a) of the act requires that (1) each applicant for
a grant submit plans, specifications, and estimates (PS&E) for each
proposed treatment works construction project to EPA for approval
and (2) EPA act upon such PS&E as soon as practicable and its
approval be deemed a contractual obligation of the United States for
the payment of its proportional contribution to such projects.
EPA regulations implementing the act provide that grants for
projects be awarded in three steps: (1) developing preliminary plans,
(2) developing detailed plans and specifications, and (3) constructing
the facility. Regulations also provide for combination grants for
preparing plans and specifications and constructing the facility
(step 2+3 grants). Through December 1973 EPA had awarded 187
step 2+3 grants, totaling about $329 million.
The Subcommittee Chairman asked us to review EPA's
regulations for committing funds for combination projects (step 2+3)
rather than for discrete segments of the construction process to
determine whether such regulations are contrary to the legislative
intent of the Congress.
On July 1, 1974, the Comptroller General told the Administrator,
EPA, that EPA's regulations were inconsistent with congressional
intent and should be revised to preclude step 2+3 grants.
TYPES OF CONSTRUCTION GRANTS AUTHORIZED
Senate report 92-1236 (p. Ill) explained the grant approval
process to be followed under section 203:
"The conferees want to emphasize the complete change in
the mechanics of the administration of the grant program
that is authorized under the conference substitute. Under
existing law and procedure, the Environmental Protection
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Agency makes the first payment upon certification
that 25 percent of the actual construction is completed.
The remaining Federal payments are also made in
reference to the percentage of completion of the entire
waste treatment facility. This results in applicants
absorbing enormous interest expense and other costs
while awaiting the irregular flow of Federal funds.
"Under the conference substitute, which is a program
modeled after the authority and procedures under the
Federal-Aid Highway Act, each stage in construction
of a waste treatment facility is a separate project.
Consequently, the applicant for a grant furnishes plans,
specifications and estimates (PS&E) for each stage
(which is a project) in the overall waste treatment
facility which is included in the term 'construction' as
defined in section 212. Upon approval of the PS&E
for any project, the United States is obligated to pay
75 percent of the costs of that project. Thus, for instance,
the applicant may file a PS&E for a project to determine
the feasibility of a treatment works, another PS&E for a
project for engineering, architectural, legal, fiscal or
economic investigations, another PS&E for actual building,
etc.
"In such a program, the States and communities are
assured of an orderly flow of Federal payments and this
should result in substantial savings and efficiency.
"It cannot be emphasized too strongly that the procedure
adopted in the conference substitute represents a complete
and thorough change of the present practice of making
payments of the Federal share of treatment works. The
conferees urge the Administrator, the States, and local
governments to draw from the experience of the highway
program to improve the efficiency of the waste treatment
grant program.
"When funding the construction of waste treatment plants,
the Administrator, upon the request of a State, should
encourage the use of a phased approach to the construction
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of treatment works, and the funding thereof, on a
State's priority list. Such a.phased program, which
the committee notes has been developed and approved
in the State of Delaware, has enabled the State to
accelerate the construction of sewage treatment
facilities, and thus accelerate the attainment of clean
water. " (Underscoring supplied.)
EPA's interim regulations governing grants for constructing
treatment works provided that grants may be awarded for the following
types of projects.
1. Projects for preparing preliminary plans and studies
(the step 1 project grant).
2. Projects for preparing construction drawings and specifi-
cations (the step 2 project grant).
3. Projects for the actual building and erection of treatment
works (the step 3 project grant).
4. Step 2+3 projects when warranted on the basis of com-
pelling water quality enforcement considerations or serious
public health problems or minimizing administrative require-
ments for projects not requiring a large amount of Federal
assistance.
5. Projects to be conducted under the so-called design-construct
method involving assumption by a single party of the responsi-
bility for both design and construction of a treatment works.'
EPA's final regulations, published February 11, 1974, restated
the grant award authority to show the division of the Federal fiscal
obligation and the Federal contractual obligation for step 2+3 project
grant awards. The final regulations state in pertinent part that:
EPA reported that it has not awarded any such grants and that it is
studying the guidelines which should apply; accordingly, we have not
discussed this type of grant.
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"* * * the United States will be contractually obligated
to pay only the Federal share of the approved Step 2
work and will not be contractually obligated to pay the
Federal share of Step 3 project costs unless and until
the plans and specifications developed during Step 2 are
approved; and (c) funds fiscally obligated for Step 3 will
be deobligated unless two sets of construction drawings
and specifications suitable for bidding purposes are
submitted to the Regional Administrator and approved
prior to initiation of construction for the building and
erection of the treatment works. "
TYPES OF CONSTRUCTION GRANTS AWARDED
As of December 31, 1973, EPA had awarded construction grants
totaling about $1. 77 billion for 676 projects.
Funds awarded Number
Type of project grant (000 omitted) of projects
Step 1 $ 2,290
Step 2 25, 508
Step 3 1,417,350
Step 2+3 329, 339a
Total $1,774,487 676
aStep 2+3 project grants ranged from $11, 850 to $80,190, 000.
Step 2 +3 project grant awards
in region V
Of the three EPA regions covered in our review, only region V
had awarded step 2+3 project grants. These grant awards, which
were all made in June and July 1973, accounted for 59 percent of all
such grant funds EPA awarded through December 31, 1973.
The following table shows the distribution of step 2+3 grants
among the States in region V.
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Funds awarded Number
(000 omitted) of projects
Illinois $15,425 15
Michigan 121,625 14
Minnesota 18,231 4
Ohio 37,592 4
Total $192,873 37
, Our review of the 33 step 2+3 grants awarded in Illinois,
Michigan, and Ohio showed that the grants were justified by the State
water pollution control agencies on the basis of one or more of the
three criteria specified in EPA's regulations: water quality enforcement
considerations, serious public health problems, or administrative
efficiency when projects do not require a large amount of Federal
assistance. One step 2+3 project was justified solely on the basis
of administrative efficiency.
The data provided by State agencies to justify step 2+3 grants
varied considerably. For example, one State agency provided EPA
with documentation showing that 11 grant applicants had been ordered
either by the courts or by the State to abate pollution of various lakes,
rivers, and creeks. However, the water pollution control agency of
another Staler merely told the EPA regional office by letter that public
health and water quality enforcement warranted the awards of step
2+3 grants without providing supporting documentation.
Region V officials told us that step 2+3 grants were approved
only when the applicant could be expected, or made a commitment,
to submit completed construction PS&E shortly after approval of
the grant. As of November 30, 1973, the construction PS&E had
been approved for all 15 projects in Illinois, 11 of the 14 projects
in Michigan, and 1 of the 4 projects in Ohio.
EPA awarded step 2+3 grants, rather than step 3 grants,
for four Ohio projects because of a change in project scope, at EPA s
direction, or because of the absence of plans and specifications for
a minor part of a project. For example, one Ohio project lacked
only the plans and specifications for landscaping.
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A region V official told us in December 1973 that the
regional office was actively following up on the six projects in
Michigan and Ohio for which complete plans and specifications
had not been received.
LEGALITY OF STEP 2+3 GRANTS
In our letter to the Chairman dated November 23, 1973, we
concluded that, as authorized by EPA's regulations, a step 2+3
project was not consistent with provisions of the 1972 act or its
legislative history and that the regulations should be revised.
In a letter dated March 18, 1974, EPA's Assistant Administrator
for Enforcement and General Counsel told us of EPA's disagreement
with our interpretation of the act concerning the award authority for
step 2+3 project grants.
The Assistant Administrator explained the need to fiscally
obligate the full amount of the step 2+3 project grant award as
follows:
"* * * Pursuant to Section 25. 1 of OMB Circular A-34 and
EPA General Grant Regulations (40 CFR 30. 305-2), the
approval of a project constitutes the basis for an obligation
of Federal funds, Ln this and other state and local
assistance programs. (This Federal practice reflects the
necessity to fiscally obligate FederaLfunds upon approval
ojf mpst state and local assistance-projects and prior to a
contractual obligation, or with such obligation as a
condition subsequent, because communities require firm
assurance and precise definition of the Federal assistance
before they can initiate actions * * * necessary to obtain
the non-Federal project funds). "
The Assistant Administrator justified the use of the step 2+3
project grant awards on the basis of (1) relatively high administrative
costs which would be incurred if low-dollar grant awards were
processed through separate project steps, (2) time savings when
reconstruction of a sewage treatment works following a natural
disaster is urgently required, and (3) a strong interest by some States
in retaining the step 2+3 project grant award authority.
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In a decision dated July 1, 1974, affirming a decision dated
February 4, 1974, the Comptroller General concluded that EPA's
regulations authorizing the award of a step 2+3 grant were
inconsistent with the provisions of the Federal Water Pollution
Control Act, as amended, and must be changed primarily because
the act authorized a Government commitment to pay a share of the
costs of a particular stage only upon approval of PS&E which were
lacking for the construction portion at its time of the grant award.
Also, the Congress wished to eliminate making large charges against
a State's allotment before they were necessary. The Comptroller
General further concluded that grants to which the Government was
already committed did not need to be annulled. EPA headquarters
immediately instructed all regional administrators to discontinue
awarding step 2+3 grants after June 30, 1974.
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CHAPTER 5
EPA BEHIND SCHEDULE IN ISSUING
EFFLUENT LIMITATION GUIDELINES
AND DISCHARGE PERMITS
To help restore the Nation's water quality, the 1972 amend-
ments provided for establishing effluent guidelines limiting the amount
of pollutants that can be discharged from point sources into navigable
waters. By July 1, 1977, industrial dischargers are to apply the best
practicable control technology currently available and by July 1, 1983,
the best available technology economically achievable. However, if
Busing this control technology does not achieve water quality standards,
more stringent limitations could be imposed.
To enforce limitations, the amendments provide for
establishing a pollution discharge permit system--the National Pollutant
Discharge Elimination System (NPDES). Under this system, EPA or
States with EPA-approved programs issue permits to dischargers
establishing effluent limitations and, if necessary, compliance time
schedules. Before a Federal permit is issued, the State in which the
discharge originates is required to certify that the discharge will comply
with applicable statutory requirements. EPA's goal is to issue all
permits by December 31, 1974.
The Subcommittee Chairman asked us to assess EPA's
performance in issuing guidelines and the effect it had on implementing
the discharge permit program.
EPA took prompt action to develop industrial effluent limitation
guidelines defining the best practicable and best available control
technology. It did not meet the statutory deadline of publishing the
guidelines by October 18, 1973, however, primarily because of the
extremely complicated and time-consuming task of developing the ,-.
guidelines which included determining the level of technology developed
for industrial categories and the time-consuming rulemaking process
which involved preparing regulations and obtaining comments from
Federal, State, and local officials and interested parties before
promulgation.
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Although the first guidelines were not published until January
1974, this had not considerably affected the number of industrial
permits processed by EPA regional offices and States. EPA and
States issued permus on the basis of interim instructions and/or
assessments of pollution discharges of individual permit applicants.
On the basis of the record through April 1974--5, 275 permits
issued--it is unlikely that permits will be issued by December 31,
1974, to the approximately 27, 000 industrial dischargers who
have applied for them.
The slow progress of issuing permits was attributed to:
--Few States, with approved permit programs, which placed
an administrative burden on EPA regional offices in
issuing permits.
--States' delays in certifying permits submitted by EPA
regional offices before issuance.
--States' problems in obtaining information needed to
establish more stringent effluent limitations to meet water
quality standards.
As of June 30, 1974, 7, 965 permits had been issued to industrial
dischargers,
DELAYED PUBLICATION OF GUIDELINES
As of April 30, 1974, final guidelines had been published for
23 industrial categories or subcategories representing about 15
percent of the estimated 27, 000 industrial permit applcations on hand.
Although EPA was unable to publish guidelines by October 18,
1973, it appeared to have acted promptly in developng guidelines for
those industrial categories which EPA said represented the worst
sources of water pollution in the Nation--the 27 industrial categories
identified in section 306 of the act. According to EPA, these 27
categories represented 78 percent of the estimated 2, 800 major
industrial dischargers of pollution into the Nation's waterways.
For these 27 categories, EPA planned to simultaneously
develop effluent limitation guidelines* new source performance
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standards, and pretreatment standards for new industrial sources
discharging into municipal sewage treatment plants. From
November 1972 to February 1973, EPA awarded 26 contracts to
private organizations to develop in-depth technical and economic
reports on the industrial categories as a basis for establishing
effluent limitation guidelines and new source performance and
pretreatment standards.
EPA also identified an additional 15 industrial categories
for which EPA planned to develop guidelines and standards, after
it did so for the 27 industrial categories. EPA said it did not
simultaneously develop guidelines for all industrial categories
because
--it did not have in-house all the technical expertise
and manpower needed for simultaneous development,
--it was necessary to contract with private institutions
to aid in the development, and
--technical problems and the size of the projects required
that some of the contracts be carried out in two phases.
To insure that guidelines would be published in time to be
used in the permit program, a Federal District Court, as a result
of a suit filed by a public interest organization, ordered EPA to
publish by November 1974 guidelines based on best practicable
control technology for all point sources of industrial dischargers of
pollution. EPA does not expect to be able to publish these guidelines
by this date.
Status of guidelines and standards
for 27 industrial categories
To cover the industries with the most extreme pollution problems
first, EPA decided to issue guidelines for 27 industrial categories in
two phases--30 subcategories to be covered in the first phase and 19
in the second.
EPA developed in-house the guidelines and standards for two
subcategories covered in the first phase and divided the work to be
done by 26 contractors into two separate phases. The first phase
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included developing guidelines and standards for about 9, 700 of
the estimated 27, 000 industrial dischargers that had submitted
applications for discharge permits which covered about 1, 700 of the
2, 800 major industrial dischargers. The second phase included
developing guidelines and standards for about 3, 000 of the estimated
27,000 industrial dischargers that had submitted applications for
discharge permits which covered about 500 of the 2, 800 major
industrial dischargers.
In June and July 1973, EPA contractors submitted their reports
to EPA on the first phase. EPA reported that it immediately began
reviewing the reports and preparing regulations, but finalizing
regulations was slow because of the need for interagency, State, and
public participation in the rulemaking process. EPA finalized these
regulations early in October 1974.
EPA's contractors submitted their reports during January to
August 1974 on the second phase. It expects to finalize these
regulations by mid-1975.
Status of guidelines and standards
for 15 industrial categories
EPA plans to develop guidelines and standards for 15 additional
industrial categories, covering about 12,800 of the estimated 27, 000
industrial dischargers, including about 600 of the 2,800 major dischar-
gers. EPA plans to contract for 9 of the 15 industrial categories
and V> develop 6 in-house.
EPA expects to finalize regulations by the end of 1974 for the
standards and guidelines to be developed in-house and by July 1975
or later for those developed by contractors.
Court order to publish guidelines
In November 1973, a Federal District Court ordered EPA to
develop and publish, as promptly as possible, effluent limitation
guidelines to provide comprehensive coverage of at least 95 percent
of point source dischargers that have applied for discharge permits
in compliance with the 1972 amendments.
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To insure that the guidelines would be published in time to
be meaningfully used in the permit program, the court order directed
EPA to promulgate final guidelines for the industrial categories no
later than certain specified dates which extended from January 15 to
November 29, 1974.
As of April 30, 1974, EPA had published final guidelines for
23 industrial categories or subcategories and expected to publish
guidelines for an additional 20 categories by November 29, 1974.
EPA does not expect to publish all final guidelines for the
remaining categories until mid-1975 or later. Therefore, it will
not be able to fully adhere to the court order.
An EPA official attributed the problem, in part, to shortages
of qualified personnel and to subsequent court-ordered extensions of
the periods for public comment for six industrial categories which
delayed the promulgation of some of the guidelines.
SLOW PROGRESS IN ISSUING PERMITS
The 1972 amendments provide immunity from prosecution until
December 31, 1974, to any discharger who has applied for a permit
but has not been issued one if the application has not been adminis-
tratively completed. EPA established the goal of issuing all permits by
that date.
As of April 30, 1974, EPA and the States had on file approxi-
mately 27, 000 discharge permit applications from industrial dischargers
and had issued 5,275 permits, or 19 percent. EPA's records indicated
that the rate of drafting and issuing permits needed to be doubled to
meet the December 31, 1974, deadline. EPA regional offices expected
that all major permits would be issued by March 31, 1975.
The lack of final effluent limitation guidelines was not the main
reason for the small number of permits issued to industrial dischargers.
When final effluent limitation guidelines were not available, EPA
regional offices and States issued permits on the basis of interim
effluent instructions and/or assessments of an individual permit
applicant's discharges.
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In its revised water strategy paper dated March 1974, EPA
stated that, if final effluent limitation guidelines were not published
for an industrial category in time for the December 1974 deadline,
permits to industrial dischargers would be written on the basis of
the best technical judgment of feasible control technology for that
category.
Implementation of permit program
According to EPA's policy, discharge permits are issued on
the basis of:
--Final guidelines outlining the best practicable control technol-
ogy when water quality standards do not call for more strin-
gent limitations.
--Interim effluent instructions^ in the absence of applicable
final guidelines.
--Water quality standards when the standards dictate more
stringent limitations than provided by best practicable
technology. However, when adequate water quality data
would not be available by mid-1974, the discharge permits
were issued on the basis of existing guidelines and the best
technical judgment of ambient conditions.
--Best technical judgment of feasible control technology when
applicable guidelines are not expected to be issued before the
December 31, 1974, deadline.
EPA had developed interim effluent instructions which were appli-
cable to major dischargers in 21 industrial categories and had
determined that permits could be issued on the basis of the interim
instructions if the instructions were thorough enough to insure that
permits would not be inconsistent with limitations subsequently
issued.
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Permits issued before publication
of final guidelines
As of December 31, 1973. before the publication of any effluent
limitation guidelines, EPA and the States had issued 2,472 industrial
discharge permits--1, 975, or 80 percent, were based on feasible
control technology and 497, or 20 percent, were based on water quality
standards.
Probably many more permits had been prepared on the basis
of feasible control technology without the benefit of the guidelines. EPA
regional offices reported that, through December 31, 1973, they had
submitted 6,735 final draft discharge permits to States for certifi-
cation before EPA issued the permits, and the States had issued 455
permits. Therefore, on the assumption that 80 percent of these
permits were based on feasible control technology as were the 2, 472
issued permits, potentially about 5. 750 draft and issued permits--
about 21 percent of the total industrial permit applications--may have
been prepared on the basis of feasible control technology through
December 31, 1973, before the publication of guidelines.
Many more industrial discharge permits are likely to be pre-
pared before the publication of applicable final guidelines, since only
23 final guidelines had been issued through April 30. 1974. EPA's
records indicated that these 23 guidelines were applicable to only about
15 percent of the total discharge permit applications.
Few States have approved permit programs
The 1972 amendments contemplated a Federal-State partnership
under which States could be authorized to administer the permit pro-
gram for discharges into the navigable waters of their jurisdictions.
As of June 30, 1974, EPA had authorized 15 States — California,
Michigan, Oregon, Wisconsin. Ohio, Washington. Vermont, Delaware,
Connecticut, Mississippi, Montana, Nebraska, Georgia, Kansas, and
Minnesota--to issue discharge permits.
Of the 5, 275 permits issued to industrial dischargers through
April 30, 1974, States issued 1,024. or 19 percent, including 183
permits under the interim authority whereby 18 States had been
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authorized to issue permits^during the 90-day period from December 18,
1972, to March 19, 1973. The grant of interim authority was intended
to be a step toward final approval when the State desired to permanently
administer the discharge permit program within its jurisdiction. How-
ever, the States' low participation has left most of the burden with
EPA. In September 1973 the EPA Administrator said it was unlikely
that all permits could be issued by December 31, 1974, without more
State participation.
The States' low participation was exemplified in EPA's region
V. The region V work plan for fiscal year 1974 showed that four of
the six States in the region were, expected to have an approved permit
program by September 30, 1973. The regional office also expected
an early shifting of the burden of issuing permits to the States and
estimated that during the 3-month period ended September 30, 1973,
it would issue 300 permits and the States would issue 366 permits.
During fiscal year 1974, the States were expected to issue
86 percent of all the permits in the region. Only three States in
region V received EPA approval to operate a permanent permit
program--Michigan in October 1973, Wisconsin in February 1974,
and Ohio in March 1974. As of April 30, 1974, 1,153 industrial
permits had been issued in region V--758 by the EPA regional office
and 395 by the States.
EPA officials attributed the following reasons for the delays
in State submissions of requests for EPA approval of their permit
programs.
--Time needed by States to write and obtain enactment of
required State legislation, prepare regulations, and prepare
a request for a State program.
--Demands placed on limited State agency resources, staffing,
and funding.
EPA officials gave the following reasons for withholding approval
of some State programs.
--Several States requested EPA to waive its authority to review
their permits.
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--One State was reluctant to impose noncompliance penalities
large enough to be an economic deterrent to violations.
Region V officials said the key to success in the permit pro-
gram is obtaining States' full cooperation, but the States had not
placed an early priority on obtaining approved programs. The
officials said further that the regional office would not have sufficient
personnel to process permits if the States did not obtain approved
programs and that they were also concerned about whether the
States would have the necessary staffing after their programs are
approved.
In a letter to us dated October 4, 1974, New York's Depart-
ment of Environmental Conservation, in commenting on the few
States with approved permit programs, stated that:
"None of the reasons ascribed to reluctance in taking over
the federal permit program apply to New York. The basic
reason for not taking over is the unrealistic date of
December 31, 1974 for issuance of all permits. The
transition from federal to state administration has been
shown to result in a hiatus of three to five months during
which few if any permits are issued. Since New York
industries numerically outrank those for any other State,
it is considered to the best interest of the total NPDES
program not to impair permit issuance procedures for the
large number of dischargers in New York by transfer of
authority during the critical period preceding December 31,
1974."
The potential for accelerating the discharge permit program
by approving State permit programs early, however, is exemplified
in EPA's region DC, where California's program, was approved in
May 1973. EPA records indicated that, of 454 industrial permits
issued in region IX through April 30, 1974, 342, or 75 percent, were
issued by California and 112, or 25 percent, were issued by the EPA
regional office in San Francisco.
P_ata_jipt_aya.i_lable for issuing permits
on the basis of water quality standards
Water quality standards are closely integrated with the 1983
interim goal of protecting fish, shellfish, and wildlife and for
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recreation in and on the water. In the permit program, water quality
standards will serve as a mechanism to determine whether effluent
limitations based on control technology are meeting the water quality
goals of the act. Where effluent limitations are not sufficient to
meet water quality standards, EPA or the States may establish more
stringent limitations and impose them in the permits.
States must undertake adequate monitoring programs to gather
accurate information on water quality from each segment of every
basin to determine whether controlling discharges from point and
nonpoint sources will achieve water quality standards. From this
information, each segment of a waterway will be classified either
as (1) a water-quality-limited segment in which water quality
standards cannot be met by controlling discharges from point sources
on the basis of control technology or (2) an effluent-limited segment
in which water quality standards can be met or in which there is
reasonable assurance that such standards can be met by applying
effluent limitation guidelines:
For any segment that is classified as water quality limited,
States must assign maximum daily load limits to facilities restricting
the discharge of pollutants from point sources. EPA's water
strategy paper, dated March 15, 1974, provides that:
"if, by the beginning of FY 1975,' analysis for load allocations
has not been performed in water quality limited segments,
industrial permits to dischargers in those segments should be
written on the basis of effluent guidelines. If, by the same
time, guidelines have not been published for a category of
sources, and are not expected to issue in time for the
December 1974 deadline, permits to industrial dischargers
should be written on the basis of the best technical judgment
of feasible control technology for that category. "
As of June 30, 1974, of 2, 087 water-quality-limited segments
requiring analysis, 1, 222, or 59 percent, had been analyzed. An EPA
official said that early in the process of classifying segments and
making waste-load allocations, EPA recognized that all water quality
'Streams, rivers, and tributaries, and the total land and surface
water area.
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segments could not be adequately analyzed by the July 1, 1974, dead-
line for use in permits, because the mass and complexity of the problem
was much more than could be handled with available resources. There-
fore, EPA identified a manageable portion of the segments and
established goals for completing those segments. According to this
official, the completion goal for July 1, 1974, was exceeded.
The States in region V had identified 459 of 849 river basin
segments as water quality limited. As of November 1, 1973, however,
waste-load allocations had been completed for 150, or about one-third,
of the identified water quality limited segments. Estimated completion
dates for waste-load allocation data for the other water-quality-limited
segments ranged from November 1973 to sometime in fiscal year 1975.
To help achieve the goal of issuing permits by December 31,
1974, region V had agreed with one State to process and issue permits
on the basis of best practicable control technology for water-quality-
limited segments of two rivers. The agreements affected about 66
dischargers and were made on the basis that the waste-load allocation
data would not be available in time to issue the permits by December 31,
1974, and that the application of best practicable control technology
would be sufficient to meet the water quality standards for these
segments.
Region V officials said that, although many major dischargers
were in areas where the waste-load allocations had not been established,
they had already drafted most of the industrial permits, some of which
were based on the best practicable technology.
In region II at least 625 of about 1, 800 industrial dischargers
are located in water-quality-limited segments for which waste-load
allocations were not expected by mid-1974. Consequently, the permits
for these 625 industrial dischargers were to be issued on the basis
of technology.
Because States have not completed waste-load allocation data
in river basin segments identified as water quality limited, many
dischargers are likely to be issued permits containing effluent limi-
tations based on technology which may not be sufficiently stringent
to achieve water quality standards.
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Review of EPA regional office
permit program operations
We reviewed the operating procedures followed by three regional
offices--Chicago, San Francisco, New York--to implement the permit
program. Each office and the States in their regions had issued
permits to less than 35 percent of the permit applicants, and they
were experiencing some of the same problems in carrying out the program.
The following schedule shows the number of applications received
and the number of permits issued by the three regional offices or
the States in their regions as of April 30, 1974.
Applications Permits
received issued Percent
Chicago 4,948 1,153 23
San Francisco 1,396 455 33
New York 1,789 232 13
To demonstrate how these regional offices were operating the
permit program, the operating procedures followed by the New York
regional office are discussed below. It should be pointed out, however,
that each of the regional offices had peculiar circumstances that differed
from the other regional offices' operations.
The New York regional office established a goal to issue about
1,350 industrial discharge permits by December 31, 1974; the remain-
ing 439 permits were not expected to be issued to applicants until
1975. Regional office officials told us that the permits to be issued in
1975 were for minor dischargers who had little effect on the environment.
As of April 30, 1974, EPA's New York regional office had
issued 232 industrial permits--70 to major dischargers and 162 to
minor dischargers. However, the regional office had prepared and
submitted 979 final draft permits to States for their certification
before issuing the permits.
The Chief of EPA's New York regional office, Industrial Water
Facilities Branch, told us the lack of effluent limitation guidelines
was not deterring the issuance of permits.
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Two prime reasons given for the small number of permits
issued were
--States' delays in certifying final draft permits submitted
by the regional office and
--States' slowness in developing waste-load allocation data
for water-quality-limited river basin segments.
Contributing to the slowness of issuing permits was the fact
that none of the States in the New York region had approved permit
programs. New York regional officials told us that, in establishing
effluent limitations in permits applying best practicable control
technology, they used either EPA interim effluent guidelines or their
best technical judgment of control technology when the interim
guidelines did not apply. The regional office had issued 24 permits
to industrial dischargers and had submitted 490 draft permits to
States for their certification through December 1973, before EPA's
publication of any final guidelines.
Of the 10 permits we reviewed in the New York regional
office, 9 showed that pollutant limitations were established primarily
on the basis of either EPA inerim guidelines or State water quality
standards. According to EPA regional officials, the regional office
issued one permit to a large chemical industry discharger on the
basis of the regional office's assessment of best practicable technology
because no usable interim effluent guidelines existed and the office
felt compelled to get this major polluter o'n an abatement schedule.
The company countered with its own proposals and the two
parties negotiated the differences. EPA officials said that, because
of the multiplicity of products and processes in the chemical industry,
personal judgment would be required in determining permit conditions
even after EPA published final guidelines.
All permits issued in region II were for a fixed term of 5
years, the maximum period allowed by the act. Region II officials
believed that it would be unfair to issue permits with shorter durations
and then require more stringent limitations within a few years on
the basis of guidelines. They also believed that water pollution control
would not be aided by allowing dischargers to continue to pollute while
awaiting final guidelines.
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Potential conflict between provisions
of permits and final guidelines
As many as 5, 750 discharge permits — about 21 percent of the
total industrial discharge permit applications on file with EPA--may
have been drafted or issued through December 31, 1973, incorporating
effluent limitations determined on the basis of EPA's interim effluent
instructions or the judgment of the EPA regional offices or the States.
Since EPA does not expect to publish all final guidelines until
1975, and since its policy calls for issuing all discharge permits by
December 31, 1974, many more permits probably will be prepared
before the publication of final effluent limitation guidelines.
Although guidelines had not yet been published, EPA regional
and State officials in regions II and DC preferred issuing discharge
permits for the statutory maximum 5-year period on the basis that
— it would be unfair to the dischargers to issue permits
with shorter durations and then require more stringent
limitations within a few years on the basis of final guidelines,
--the issuance of permits for the maximum 5-year period
would ease the administrative workload of the permit
program, and
--it was not acceptable to allow dischargers to continue to
pollute the Nation's waters while awaiting final guidelines.
We recognize the desirability of placing polluters under
pollution abatement schedules as soon as possible and the need to
process as many permits as possible by December 31, 1974, so that
permit applicants will not be subject to prosecution. However, such
permits may contain effluent limitations less stringent than those
prescribed in the subsequently issued guidelines. If issued for the
maximum 5-year period, this could result in some industrial dischargers'
not meeting the legislative requirements that they apply the best practi-
cable control technology currently available by July 1, 1977.
EPA agreed that permits issued before final guidelines may
contain effluent limitations less stringent than those subsequently pre-
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scribed in the guidelines. EPA stated, however, that in most
cases the permits contained effluent limitations either equivalent
to or more stringent than those prescribed in the final guidelines.
EPA further stated that it opposed modifying permits on a regular
basis because industrial dischargers would not proceed with the
implementation of permit conditions under the threat of changing
requirements and direction. Therefore, the minor added accuracy
to be achieved through permit modification would not be worth
the resultant delay of water cleanup.
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CHAPTER 6
DELAY IN EFFECTIVE ARE A WIDE PLANNING
TO CONTROL WATER POLLUTION
Section 208 of the act provides for the development and
implementation of areawide waste treatment management plans. Pursuant
to this section of the act, States are to designate areas which have
major water quality problems and a single representative organization
capable of developing effective areawide waste treatment management
plans for the area. The amendments required EPA to publish area-
wide planning guidelines by January 16, 1973, but EPA did not publish
final guidelines until September 14, 1973.
The Subcommittee Chairman asked us to analyze the effect
the delayed publication of areawide planning guidelines would have
on carrying out regulatory provisions of the act, as amended in 1972
(sections'3Q1, 302, 306, 307, and-402). Because of the extended time
frame provided by the act for the States to submit areawide waste
treatment management plans for EPA's approval, the delayed publi-
cation of these guidelines will have only a limited immediate effect.
EPA's delayed publication of areawide planning guidelines
deferred EPA's approval of planning organizations and the preparation
and approval of areawide waste treatment management plans. The
regulatory powers in section 208 will probably not be effectively used
to control and abate water pollution until fiscal year 1977 or later.
Consequently, implementation of areawide planning for areas with major
pollution problems could be delayed about a year which could also delay
--implementing areawide waste treatment management require-
ments for controlling or treating point and nonpoint sources
of pollution;
--establishing land use requirements and controlling the
location, modification, and construction of discharging
facilities; and
--establishing plans to insure that industries discharging
x into treatment plants meet applicable pretreatment
requirements.
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State officials in the six States reviewed told us they were
either reluctant to designate section 208 planning agencies or
concerned with problems of implementing areawide planning.
The Chairman was also concerned that EPA's areawide
planning regulations permitted a single agency to be responsible
for planning in more than one planning area. In a letter dated
November 23, 1973, we told the Chairman that we had found
nothing to preclude a section 208 planning agency from serving
more than one area so long as all the requirements of the act
were met.
SLOW IMPLEMENTATION OF
AREAWIDE MANAGEMENT PLANNING
The stated purpose of section 208 is to encourage and facili-
tate the development and implementation of areawide waste treatment
management plans. It provides, in part, that:
--EPA shall publish by January 16, 1973, guidelines for
identifying those areas which, as a result of urban-industrial
concentrations or other factors, have major water quality
control problems.
--State Governors will identify each area and designate (1)
the boundaries and (2) a single representative organization,
including elected officials from local governments or their
designees, capable of developing effective areawide waste
treatment management plans for the area. If a Governor
does not act either by designating or by determining not to
make a designation within 180 days after publication of the
guidelines, the chief elected officials of local governments
within an area may, by agreement, make the designations.
--The planning organization for an area has 1 year from the
date of designation to establish a continuing areawide waste
treatment management planning process. Within 2 years
after the planning process is in operation, the Governor will
certify an initial plan prepared according to the planning
process and submit it to EPA for approval.
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--EPA will make grants to designated planning agencies
for paying the costs of developing and operating continuing
areawide waste treatment management planning processes.
On May 30, 1973, EPA published proposed guidelines for
identifying the areas having major water quality control problems and
for designating areawide waste treatment management planning agencies
and on September 14, 1973, published final guidelines.
EPA said it failed to publish guidelines by the statutory date
of January 16, 1973, because of the time needed to obtain comments
from State and local governments who were interested in the regulations
and the nature of areawide planning agencies and because areawide
planning needed to be coordinated with other Federal regional planning
programs. EPA officials told us that limited resources also
contributed to the delay.
After EPA guidelines were issued, the States had 180 days
(by March 1974) to submit their designations of planning areas and
agencies to EPA for approval. EPA headquarters retained the final
approval authority for area and agency designations and did not plan
to approve any fiscal year 1974 designations until all designations
had been received from the States—designation approvals were
expected to be made in April 1974. As of September 30, 1974, EPA
had approved 19 designations—1 in April 1974, 13 in June 1974, 1
in July 1974, 2 in August 1974, and 2 in September 1974--and 5
designations were under review at EPA headquarters.
If EPA had published the guidelines by January 16, 1973, as
required by section 208, the State Governors would have been required
to certify and submit the initial areawide waste treatment management
plan to EPA's Administrator no later than mid-July 1976.
Because EPA delayed publication of areawide planning guide-
lines and deferred approval of designated planning organizations until
April 1974, the States will have until April 1977 or later to submit
the plans. Consequently, implementation of areawide planning for -
areas with major pollution problems could be delayed about a year.
EPA believes that the delayed issuance of guidelines would not
be detrimental to achieving the objectives of the program. In February
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II
1973 EPA's Deputy Administrator said:
"It would be impossible to get a section 208 agency up and
running in time to influence the actions that will lead to
the attainment of the 1977 goal. Therefore, we view the
208 agency as a device to target in on the very difficult
problems that are not solved by 1977, but must be by 1983.
Government funds for section 208 planning
To finance the costs of developing and operating a continuing
areawide waste treatment management planning process, section 208
authorizes EPA to award designated areawide planning agencies grants
totaling $50 million, $100 million, and $150 million for fiscal years
1973, 1974, and 1975, respectively. Section 208 also provides that
EPA's approval of a grant application be deemed a contractual
obligation of the United States.
Because guidelines were not published by January 16, 1973, no
portion of fiscal year 1973 funds was requested by EPA nor apportioned
or released by the Office of Management and Budget, and only $25
million of the $100 million available for fiscal year 1974 was apportioned.
For fiscal year 1975, $120 million of the $150 million authorized by
the 1972 amendments was apportioned.
Since section 208 affords the State Governors up to 180 days
following the issuance of EPA guidelines to submit designations of
planning areas and agencies, Governors' time for implementation
could have extended beyond the end of fiscal year 1973 even if EPA
had issued the guidelines by the January 16, 1973, deadline, thereby
precluding EPA from awarding grants to areawide planning agencies
in their States during fiscal year 1973.
States' problems with areawide planning
State water pollution control agency officials in the six States
reviewed told us they were concerned with the problems entailed in
implementing section 208. Three States were reluctant to designate
section 208 areas and waste treatment management planning agencies.
One State had selected several areas for consideration as
potential section 208 areas subject to public hearings. Officials of
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this State told us, however, that their State would not designate a
section 208 area unless a local plan could resolve serious water
pollution problems better than State areawide planning. Subsequently,
this State designated two section 208 areas which EPA was reviewing
in May 1974.
State officials also said that:
--Areawide planning agencies were not needed if the State
had been active in planning and implementing a water
quality program.
--Abatement actions included in State areawide plans could
be delayed while section 208 planning agencies developed
their own plans which are not required to be submitted
until 3 years after the agencies are designated.
--Many municipalities would view areawide planning as an
encroachment on their local zoning authority which they were
unwilling to relinquish; therefore, these municipalities might
not enter into required cooperative agreements.
--Designations of multiarea planning organizations would compound
the problems of getting local cooperation and agreement
because of municipalities' strong home rule attitude.
EFFECT ON AMENDMENTS1 REGULATORY PROVISIONS
.EP-A's delayed publication of the areawide waste treatment manage-
ment planning guidelnes will have only a minor immediate effect on the
operation of controls applied through sections 301, 302, 306, 307, and
402 of the act. If EPA had met the statutory deadline, the States would
not have been required to submit initial plans to EPA for approval
until mid-July 1976. It appears that the planning agencies would have
only a limited opportunity to help meet the 1977 requirements. There-
fore, the principal impact of section 208 in carrying out regulatory
provisions would be on efforts to meet the 1983 requirements.
Sections 301, - 302, and 402
Section 301 requires, in part, the achievement of effluent
limitations for industry on the basis of best practicable technology
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currently available by July 1, 1977, and best available technology
economically achievable by July 1, 1983. It also requires the
achievement of effluent limitations on the basis of (1) secondary
treatment for publicly owned treatment works in existence on
July 1, 1977, or approved before June 30, 1974, and constructed
within 4 years of approval and (2) best practicable waste treatment
technology for publicly owned treatment works by July 1, 1983.
Section 301 further requires the achievement by July 1, 1977,
of any more stringent limitations, including those necessary to meet
water quality standards, treatment standards, or schedules of
compliance, established pursuant to any Federal or State law or
regulations.
Section 302 provides that, whenever effluent limitations for
a point source based on best available technology or best practicable
waste treatment technology required by July 1, 1983, interfere with
attaining or maintaining water quality in a specific portion of the
navigable waters, more stringent effluent limitations be established.
Section 402 provides for the issuance of permits to enforce
the effluent limitations. (The issuance of permits to industrial
dischargers is discussed in chapter 5.) These effluent limitations
will be applicable nationwide, except in those areas where more
stringent limitations are needed to meet water quality standards or
certain other requirements.
EPA's goal under the permit system is to issue initial discharge
permits to all dischargers by December 31, 1974. The permits may
be issued for a maximum of 5 years. Since section 208 areawide
planning program probably will not be implemented for several years,
the program will have no apparent effect on the effluent limitations
in the first round of permit issuance.
Section 208 areawide management plans could affect effluent
limitations in the second round of permit issuances if the need to
meet water quality standards calls for more stringent limitations
than provided by EPA's effluent limitation guidelines. Section 208
planning agencies could control the number and types of new dischargers
through their regulatory powers governing land use and the location,
modification, and construction of discharging facilities.
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Section 306
This section requires EPA to publish regulations establishing
Federal standards of performance for new discharge sources. These
standards relate to the control of pollutant discharges and encourage
the greatest degree of effluent reduction achievable. They are based
on technology and are independent of section 208. However, the
standards could be used by a section 208 planning agency in carrying
out its regulatory controls over new discharging facilities.
Section 307
Section 307 requires EPA to promulgate standards for toxic
materials and for pretreating pollutants discharged into publicly
owned treatment works. The pretreatment standards would apply
to pollutants which could not be treated by a treatment plant or which
could interfere with its operation. Both standards would be appli-
cable nationwide without regard to specific section 208 implementation.
Implementation of the standards could be facilitated by areawide
planning agencies. Section 208 requires that areawide waste treatment
management plans include a regulatory program to insure that
industrial-pr commercial wastes discharged into an area treatment
plant meet applicable pretreatment requirements.
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CHAPTER 7
EPA'S ASSESSMENT OF U.S. CONSTRJCTION CAPABILITY
TO B'JILD MORE SEWAGE TREATMENT FACILITIES
Early in 1972 EPA stated in an in-house study that the con-
struction industry was experiencing increasing difficulty in supplying
the services needed for sewage construction at the rate matching
available Federal funding.
The Subcommittee (Chairman asked us to review in several
States EPA's claim that the construction industry could not provide
the services needed for constructing publicly owned waste treatment
facilities under the 1972 amendments.
After the Chairman's request, EPA concluded on the basis
of three studies that the construction industry should be able to build
the required waste treatment facilities without large price increases.
Many State and construction industry officials also told us that the
construction industry could meet the demands for constructing
treatment facilities.
After the three contractor reports on J. S. construction
capability were received in December 1972, April 1973, and October
1973, EPA stated in its December 1973 report to the Congress entitled
"The Economics of Clean Water, " that:
"The economic impacts and other constraining factors examined,
other things being equal, in EPA's view should not signifi-
cantly retard the accelerated program launched by the 1972
amendments to control pollution from municipal and
industrial sources. ***"
"The results of econometric models indicate that the construction
Industry should be able to build the required facilities with
real price increases of less than 1 percent attributable solely
to EPA-stimulated demand, assuming resource transferability
within the construction industry. The skilled labor needed
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should be available but there will be some impact on wages.
In some localities, the construction industry may lack
adequate short-term capacity, especially in light of changes
in the Nation's economy that may result from the recent
devaluations and the energy crisis. "
Two of the three EPA contractors reported that assessments
of construction industry capability in individual States was not
feasible because needed data was not available and State construction
trends frequently varied from national trends.
REVIEW IN SIX STATES
Our review of construction industry's capability to build more
sewage treatment facilities included examining records on construction
activity, interviewing officials of State and local governments and of
the construction industry, and inquiring into the availability of data
which might show the construction industry's capacity to construct
treatment facilities authorized by the 1972 amendments.
Our analysis in the six States showed reasonably active bidder
interest in projects for constructing treatment facilities. However,
.we were unable to assess on a State-by-State basis the construction
industry's capability to build sewage treatment facilities at a rate
matching the funding authorized by the 1972 amendments because
resources could be drawn from other States and statistical data and
studies were not available.
Mobility of construction industry resources
Many contractors are mobile,and bid on distant out-of-State
projects. For example, of eight contractors who bid on a contract
for constructing an interceptor sewer in New York in 1973, only one
was based in that State. The other seven contractors were based in
other States, including Nebraska and Illinois.
With full funding as authorized by the 1972 amendments and the
increased construction of sewage treatment facilities nationwide,
contractors would have less incentive to compete for distant projects,
thereby possibly reducing construction capacity in some areas.
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An officer of a large consulting engineering firm told us that
an expanded waste treatment facilities construction program would
require engineers from an out-of-State office and full funding of the
program might cause difficulty in getting enough engineers in
certain locations.
Analysis of contractors^ bids
To get an indication of construction industry interest in building
treatment facilities, we analyzed the bids received in 1973 on selected
projects in the six States. The results of our analysis are summarized
in the following table.
Average
Number number of
of Number bids per
contracts of bids contract
California 19 155 8.2
Illinois 11 ' 58a 5.3
Michigan 3 17 5.7
Ohio 12 64 5.3
New Jersey 2 26 13.0
New York 25 142 5.7
aThe consulting engineer for a project for constructing an interceptor
sewer in southern Illinois on which no bids had been submitted blamed
a saturated construction market in the area and a tight 12-month
completion schedule.
STATE, LOCAL GOVERNMENT, AND
INDUSTRY OFFICIALS' COMMENTS
State, local government, and construction industry officials
differed in their opinions as to whether the construction industry was
capable of constructing a large number of additional facilities. Some
questioned the availability of special equipment and experienced design
engineers, but many believed that the construction industry would
encounter no serious problems in meeting increased treatment facilities
construction demands. However, they were unable to identify any
studies or data showing the extent of the construction industry's capacity
to construct additional treatment facilities in the six States.
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California
An official of a major contractor's assocation in California
told us that the construction industry could handle a greatly increased
workload,and, in fact, many California-based firms were seeking
work outside the State. He said, however, that the licensed contractors
with the engineering design capability required for public utility-type
construction, such as waste treatment projects, were not looking for
work to the same extent as other general contractors.
He doubted that these contractors could handle the number of
projects that would be initiated under the full funding of the act; the
problem was not in obtaining the general-type construction workers
or the skilled craftsmen but was in obtaining the needed number of
experienced design engineers. It would take time to either train
additional water quality engineers or bring them in from other areas.
State water pollution control agency officials told us that
they believed the construction industry was capable of handling an
expanded waste treatment construction program. The executive
director cited discussions with representatives of contractors, labor,
engineering consultants, and equipment suppliers who assured him
th'at they could service a greatly expanded treatment facilities construction
program. The executive director acknowledged, however, that some
manpower resources would have to be drawn from other parts of the
country to help meet the needs of the expanded program.
The State water pollution control agency officials also told us
that, although they had neither experienced nor heard of problems with
the construction industry, they had had problems with the work of
inexperienced design engineers.
Illinois, Michigan, and Ohio
.Officials of the State environmental agencies in Illinois, Michigan,
and Ohio, as well as officials of various construction industry professional
societies and trade associations, agreed that the construction industry
could have provided the necessary services to construct more projects
if more Federal funds had been made available. Some cited cutbacks
in Federal highway and housing construction, thereby making more
construction resources available for waste treatment construction.
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New York and New Jersey
Some State and local government and industry officials were
doubtful about the availability of certain materials, special equipment,
and engineering capability. The officials generally agreed, however,
that the construction industry could provide the necessary services to
construct more facilities. Some of the officials cited the following
factors to support their opinions.
--Local contractors were operating much below their capacity
and were competing against other contractors from across
the country.
--Bidding for projects was active and most bids were lower
than the engineering cost estimates.
--Construction of highways and buildings had decreased, thereby
making more resources available for constructing treatment
facilities. Contractors and engineers could easily convert
to sewage treatment construction.
--The labor force was available for construction work. For
example, many unemployed skilled and unskilled construction
workers were in New York City.
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CHAPTER 8
CONCLUSIONS. AGENCY AND STATE COMMENTS, AND
MATTER FOR CONSIDERATION BY THE SUBCOMMITTEE
The 1972 amendments established a national goal of eliminating
the discharge of pollutants into navigable waters by 1985 and an
interim-goal of water quality sufficient for the protection and
propagation of fish, shellfish, and wildlife and for recreation by 1983.
It is doubtful that these goals will be achieved unless greater progress
is made in implementing provisions of the 1972 amendments.
Many States and municipalities did not meet EPA requirements
in its regulations for awarding construction grants. As a result,
there were delays in EPA's providing financial assistance to munici-
palities to construct sewage treatment plants that would meet
secondary treatment standards by July 1, 1977, as required by the
amendments.
EPA has encountered considerable problems in meeting the
timetables established by the amendments. It apparently took prompt
action to develop industrial effluent limitation guidelines but was
unable to publish them by the required date of October 18, 1973.
Because the guidelines were not available when needed, EPA
and States issued pollution discharge permits to industrial dischargers
on the basis of interim instructions and assessments of control
technology for pollution discharges of individual permit applicants.
Such permits may contain effluent limitations less stringent than those
prescribed in the guidelines and, if issued for the statutory 5-year
maximum, could result in some industrial dischargers' not meeting
the legislative requirement that they apply the best practicable control
technology currently available by July 1, 1977.
EPA is also experiencing problems issuing industrial pollution
discharge permits, and it is unlikely that permits will be issued to
all dischargers by December 31, 1974. After this date, dischargers
who have submitted applications for, but have not received discharge
permits, are no longer immune from either governmental or citizen
legal actions even though EPA or States with EPA-approved permit
programs were unable to promptly process their permit applications.
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The 1972 amendments required EPA to publish areawide waste
treatment planning guidelines by January 16, 1973. but EPA did not
publish final guidelines until September 14, 1973. The delayed publi-
cation of the guidelines and the reluctance of some States to designate
planning organizations has deferred for about a year the preparation
and approval of areawide waste treatment management plans for areas
with substantial pollution problems.
Consequently, most planning organizations probably won't use
regulatory powers to effectively plan for the control and abatement
of water pollution in areas with major water pollution problems until
fiscal year 1977 or later.
Also:
--The President's impoundment of $9 billion of the $18 billion
authorized by the amendments for construction grants could
seriously hamper the progress of many municipalities, once
the administrative and legislative requirements are met,
in achieving secondary treatment and the goal of the 1972
amendments of eliminating the discharge of pollutants into
navigable waters by 1985. Further, funds needed by
municipalities to construct eligible facilities--$60 billion
according to EPA--far exceed the funds authorized by the
amendments.
--EPA's regional goals for obligating funds for constructing
municipal sewage treatment facilities did not preclude regional
offices from awarding each State's proportionate share of
the $5 billion allocated for fiscal years 1973-74, and increases
to individual regions were made where appropriate.
--Funding of step 2+3 projects was not consistent with the
provisions of the 1972 amendments or its legislative history,
and on July 1, 1974, the Comptroller General told the
Administrator, EPA, that the regulations should be revised
to preclude such projects.
--EPA concluded that the U.S. construction industry should be
able to build treatment facilities at a rate matching available
Federal funding without significantly contributing to inflation.
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AGENCY AND STATE COMMENTS
In August 1974 this report was submitted to EPA and the
water pollution control agencies of the six States included in our
review.
With respect to the termination of immunity from legal
actions after December 31, 1974, for dischargers who have submitted
applications for, but have not received, discharge permits because
the applications were not administratively completed, EPA said that
it was committed to issue substantially all major permits by
December 31, 1974. EPA said also that:
--EPA did not intend to take enforcement action against any
applicant whose permit could not be issued by the deadline
and intended to discourage such action by citizen groups.
Since a citizen is required to notify EPA 60 days before
commencing legal action, EPA would try to issue the
permit during that period.
--In the opinion of EPA's General Counsel, a court would not
find a discharger in violation of the act for failure to have
a permit when the administering agency has failed to take
action on the permit application.
According to the cited EPA legal opinion, the opinion was based
on "an interpretation of rather sparse and confused case law and an
ambiguous section of the statute. " Even if, as EPA believes, a court
would be unlikely to find a discharger in violation of the act when the
administering agency had failed to take action on the permit appli-
cation, a discharger could still be subject to expensive and time-
consuming litigation.
The EPA legal opinion also recognized that there will be a large
number of permits which will not be issued by December 31, 1974,
to those sources who filed applications. Therefore, many dischargers
would no longer be immune from legal actions after that date.
Five of the six States water pollution control agencies submitted
comments which we evaluated and appropriately considered in the
report. An official of the sixth State agency told us that the agency
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agreed, in general, with our findings but did not intend to submit
comments.
--The California Water Resources Control Board stated
that the goals of the act would not be met primarily
because Federal funding was inadequate and achievement
of the goals was too big a job for the amount of time and
engineering manpower available.
--The Michigan Department of Natural Resources stated
that the slowdown of the construction grant program was
caused by EPA s inability to timely promulgate regulations
and by the constantly changing requirements a community had to
meet before a grant was made.
--The New York Department of Environmental Conservation
attributed the responsibility for the slow implementation of
the act to EPA's rigorous application of stringent require-
ments.
/
--The New Jersey Department of Environmental Protection and
the Illinois Environmental Protection Agency indicated
substantial agreement with the information presented.
MATTER FOR CONSIDERATION BY THE SUBCOMMITTEE
To discourage the possibility of legal action against a discharger
who has not been issued a permit by December 31, 1974, even though he
has made proper application, the Subcommittee may wish to propose
amending section 402(k) of the Federal Water Pollution Control Act,
as amended, to provide that such a discharger shall not be in violation
of applicable provisions of the act because a permit has not been issued.
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APPENDIX I
JEMMNai HAMMtVM, W. VA, eHAIMIAM
EDMUMO «. MUWCIC. MAIM MBWARB H. MMCT,
JMEPH M. MOHTOVA, N. MIX. JAME* L. WeKUV, M.».
MIKI MAVEL, ALAtKA HOHHT T. •TAPTOKO, VT.
UOTO KNnEM. TEX. WILLIAM l_ KOTT, VA.
qurmm N. tumtex, N. OAK. JAME* A. we emm, IDAHO
DICK CLA«K, IOWA PETE V. DOMEWCI. N. MEX.
IBCEPH •. •DEN, Jit., DEL.
M. EAimr MEVEH, CHJEP OOUHEEL AND CMEP CLEHK
COMMITTEE ON PUBLIC WORK*
WASHINGTON, D.C. Z0510
June 29, 1973
Honorable Elmer B. Staats
Comptroller General
General Accounting Office
441 G Street, N.W.
Washington, B.C.
Dear Mr. Comptroller:
Recent decisions of the Environmental Protection Agency relating
to the 1972 Federal Water Pollution Control Act Amendments, taken in proposed
and promulgated regulations, internal policy documents, and through the
issuance of discharge permits appear to be inconsistent with the requirements
of the law. These decisions require an analysis and documentation of their
extent.
Most recently, several decisions discussed below have come to the
attention of the staff of the Subcommittee on Air and Water Pollution on
which your review and recommendation is requested.
1. The Agency has apparently been instructed by the Office of-Manage-
ment and Budget to impound ?2.9 billion of allocated funds for IY 1973 and
FY 1974. Recently, the Agency "learned" that the new formula under the law,
which requires immediate payment to communities as project work is completed
and requires that final plans, specifications and estimates must precede the
actual contractual obligation of the United States, has radically revised
the level of outlays to be expected as a result of Federal grant obligations.
In other words, while the Agency only expected $200 million in outlays
in fiscal 1974, it now appears that that figure wUl be Considerably higher
(as much as $600 million; and will rise in proportion to any obligations in
excess of the OMB-permitted $2.1 billion for FY '73-'74. The Office of Manage-
ment and Budget has told the Agency that they cannot enter into obligations *
which would require an outlay of expenditures in excess of $600 million in
fiscal 1974. Thus, in addition to cutting back the allocation to States from
$11 billion to $5 billion for those two fiscal years, the Agency hab further
cut back the available funds for obligation to $2.1 billion. This means of
course that the program will proceed at a pace which is almost equal to the
pace that was set in 1972 and 1973 whc?n $2 billion was authorized (prior to
enactment of the 1972 Act which raispd FY 1973 authorisation to $5 billion).
53
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APPENDIX I
Honorable Elmer B. Staats
Page Two
June 29, 1973
The Subcommittee on Air and Water Pollution is very concerned about
what effect, this will have on the overall implementation of the 1972 Act.
2. The Agency has made a, decision to allocate, regionally, the limited
funds available as the result of the allocation and further impoundment de-
cisions. In other words, rather than having money available on a State-by-
State basis in proportion to the State's share of the apportioned funds, each
regional Administrator will be permitted to approve projects without regard
to State share of its overall allocation. This means that the regional
Administrator could refuse to fund projects entirely in certain States while
funding projects in other States at or near the maximum apportionment that
that State might receive under the $5 billion figure.
The Subcommittee is concerned that this will operate to discriminate
between State programs in a manner not anticipated or authorized by the 1972
Act and would violate the mandatory requirements of Section 203.
3. Even in the face of clear legislative history, the Agency has
determined that tne Congress aid not intend that the project approval grant
obligation process should be similar to the Federal-Aid Highway Program which
requires a submission of plans, specifications and estimates suitable for
bidding prior to grant obligation on the part of the United States. Rather,
EPA has determined that a complete treatment works project can be approved
before preparation of plans, specifications and estimates with each portion
of the project or the entire project subject to approval at some later date,
though a contractual obligation to pay the Federal share of the completed
projects cost would occur at the time of initial approval.
The EPA policy is adopted in the face of the following statement of
the Managers:
"Under the conference substitute, which is a program
modeled after the authority and procedures under the Federal-
Aid Highway Act, each stage in construction of a waste treat-
ment facility is a separate project. Consequently, the appli-
cant for a grant furnishes plans, specifications' and estimates
(ES&E) for each stage (which is a project) in the overall waste
treatment facility which is included in the term 'construction'
as defined in section 212. Upon approval of the PS&E for any
project, the United States is obligated to pay 75 percent of
the .iosts of that project. Thus, for instance, the applicant
may file a PS&E for a project to determine the feasibility of
a treatment works, another PS&E for a project for engineering,
architectural, legal, fiscal, or economic investigations, another
PS&E for actual building etc.
"In such a program, the States and communities are assured
of ;\r. orderly flow of Fedora.l payments and this should result in
r.uU;fcanti.il saving; ?;!>..•• - ffi-iun:- . "
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APPENDIX I
Honorable Elmer B. Staats
Page Three
June 29, 1973
Also, this policy means that the Agency will be committing funds for
total projects rather than for discrete segments of projects. The Congress
intended this to be a method of making more funds available at a more rapid
rate to assure initiation and steady progress toward completion of more
projects. The effect of the Agency's policy is to force all of the funds
available in the present tight money situation into a few limited areas rather
than to have construction proceed on a broad front.
4. At this time, EPA has not promulgated any effluent guidelines for
classes or categories of sources under section 3Qk. Few permits have been
issued under section 402 and those that have been are the result of individual-
ized negotiation rather than any assessment of "best practicable technology"
nationwide.
Could you assess this program in issuing guidelines -under section 30U
and the effect of the performance of the Agency in this area on implementation
of the permit program under section 1*02.
5. Planning - The Act moved planning decisively toward management and
regulation through the areawide control structure set up under section 208.
These plans are directed at sources rather than ambient controls as developed
under the 1965 Act. To support this new planning mechanism, section 208
authorized 100J& grants with contract authority for 2 years. EPA has only
recently,published proposed guidelines to initiate the implementation of this
authority and these guidelines hardly merit the name. For instance, they
provide that 208 planning agencies can serve more than one 208 area. This Is
apparently to allow HUD established Regional Planning Commissions and others
to serve as 208 agencies. Could you analyze the restrained implementation of
the 208 program by the Agency as it will affect the overall operation of the
controls applied through sections 301, 302, 306, 307 and 1*02?
6. The EPA has alleged the construction industry is not capable of
absorbing more than the funds they are making available - after refusal to
allocate and impoundment - under the 1972 Act. Could you review this allegation
with respect to at least some representative states?
7- Under Section 10l(a)(6) and further elaborated especially in
Section lO^(d)(l) (relating to municipal systems under section 201 which
confine and contain pollutants) EPA is mandated to conduct and support re-
search. The Subcommittee is concerned that the Agency has not undertaken
satisfactorily the research programs necessary to implement the new concepts
established in the 1972 Amendments. Would you please review the Agency's
efforts in pursuing these "V3W concepts?
55
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APPENDIX I
Honorable Elmer B. Staats
Page Four
June 29, 1973
The Subcommittee on Air and Water Pollution would appreciate your
review of the Agency's actions in the above described areas, documenting
their actions, proposed or promulgated, against the timetables and standards
set out in the Act. The Subcommittee would also appreciate your recommendation
for remedies, including-any need for legislation.
Sincerely,
EDMUND S. MJSKIE, U.S.S.
irman, Subcommittee on
Air and Water Pollution
56
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COMPARISON OF ERA'S ALLOCATIONS OF CONSTRUCTION
GRANT FUNDS TO SIX STATES WITH AMOUNTS
AUTHORIZED BY 1972 AMENDMENTS
Allocated by
EPA for
Authorized
by 1972 amendments
Difference
Region II:
New Jersey
New York
Region V:
Illinois
Michigan
Ohio
Region IX:
California
Total
FY 1973
$154,080
221,156
124,978
159,628
115,474
196,352
$971.668
FY 1974
$ 231,120
331,734
187,467
239,442
173,211
294,528
'$1,457,502
FY 1973
._„_„„„__ .J f\f\f\
$ 385,200
552,890
312,445
399,070
288,685
490,880
$2 _t 429, 170
FY 1974
$ 462,240
663,468
374,934
478,884
346,422
589,056
^$2,915.004
FY 1973
$ 231,120
331,734
187,467
239,442
173,211
294,528
$1,4.57,502
FY 1974
$ 231,120
331,734
187,467
239,442
173,211
294,528
$1,457,502
APPEND
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APPENDIX III
COMPARISON OF ERA'S ALLOCATIONS FOR FISCAL YEARS 1973-74
WITH OBLIGATIONS THROUGH DECEMBER 1973 FOR CONSTRUCTING
SEWAGE TREATMENT FACILITIES UNDER PUBLIC LAW 92-500
Allocations
Obligations'
Region I:
Connecticut
Maine
Massachusetts
New Hampshire
Rhode Island
Vermont
Region II:
New Jersey
New York
Puerto Rico
Virgin Islands
Region III:
Delaware
Mary! and
Pennsylvania
Virginia
West Virginia
FY 1973
$ 33,620
19,350
75,152
16,618
9,778
4,436
158,954
154,080
221,156
17,690
1,786
394,712
13,130
85,164
108,428
58,286
9,998
District of Columbia 14, 228
Region IV:
Alabama
Florida
Georgia
Kentucky
Mississippi
North Carolina
South Carolina
Tennessee
289,234
7,224
72,528
19,460
13,198
7,870
18,458
12,910
23,210
174,858
FY 1974
---- fnnrt nm
$ 50,430
29,025
112,728
24,927
14,667
6,654
238,431
231,120
331,734
26,535
2,679
592,068
19,695
127,746
162,642
87,429
14,997
21,342
433,851
10,836
108,792
29,190
19,797
11,805
27,687
19,365
34,815
262,287
Total
Amount
Percent
obligated
litted)
$ 84,050
48,375
187,880
41,545
24,445
11,090
397,385
385,200
552,890
44,225
4,465
986,780
32,825
212,910
271 ,070
145,715
24,995
35,570
723,085
18,060
181,320
48,650
32,995
19,675
46,145
32,275
58,025
437,145
$ 40,747
34,181
136,865
25,171
8,367
2,525
247,856
214,314
221 ,285
_«_
—
435,599
-._
91,569
69,195
84,173
2,955
35,363
283,255
212
18,793
18,439
10,433
534
6,532
6,731
12,211
73,885
48.5
70.7
72.8
60.6
34.2
22.8
62.4
55.6
40.0
_„
--
44.1
_.
43.0
25.5
57.8
11.8
99.4
39.2
1.2
10.4
37.9
31.6
2.7
14.2
20.9
21.0
16.9
58
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APPENDIX II
Allocations
Obligations'
Region V:
Illinois
Indiana
Michigan
Minnesota
Ohio
Wisconsin
Region VI:
Arkansas
Louisiana
New Mexico
Oklahoma
Texas
Region VII:
Iowa
Kansas
Missouri
Nebraska
Region VIII:
Colorado
Montana
North Dakota
South Dakota
Utah
Wyomi ng
Region IX:
Arizona
California
Hawaii
Nevada
American Samoa
Guam
Trust Territory
of Pacific
FY 1973
124,978
67,324
159,628
40,638
115,474
34,830
542,872
7,072
18,856
4,216
9,216
55,388
94,748
23,114
7,484
33,112
7,416
71,126
6,332
3,324
934
1,896
2,816
536
15,838
2,692
196,352
6,606
5,754
96
1,744
756
214,000
FY 1974
/AAA /%|ri<|
187,467
100,986
239,442
60,957
173,211
52,245
814,308
10,608
28,284
6,324
13,824
83,082
142,122
34,671
11,226
49,668
11,124
106,689
9,498
4,986
1,401
2,844
4,224
804
23,757
4,038
294,528
9,909
8,631
144
2,616
1,134
321,000
Total
i "h^ofi^
312,445
168,310
399,070
101,595
288,685
87,075
1,357,180
17,680
47,140
10,540
23,040
138,470
236,870
57,785
18,710
82,780
18,540
177,815
15,830
8,310
2,335
4,740
7,040
1,340
39,595
6,730
490,880
16,515
14,385
240
4,360
1,890
535,000
Amount
79,561
26,192
168,227
46,635
112,706
2,419
435,740
15,148
13,527
1,677
6,434
52,713
89,499
28,736
5,358
21 ,537
5,301
60,932
2,985
708
992
426
5,111
1,468
62,666
4,819
298
69,251
Percent
obligated
25.5
15.6
42.2
45.9
39.0
2.8
32.1
85.7
28.7
15.9
27.9
38.1
37.8
49.7
28.6
26.0
28.6
34.3
35.9
30.3
20.9
31.8
12.9
21.8
12.8
33.5
15.8
12.9
59
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APPENDIX HI
Allocations Obligations
Percent
FY 1973 FY 1974 Total Amount obligated
. (000 oml ttelfp1-
Region X:
Alaska 4,504 6,756 11,260 10,344 91.9
Idaho 4,354 6,531 10,885 3,477 31.9
Oregon 16,988 25,482 42,470 37,353 88.0
Washington 17.812 26.718 44,530 22,185 49.8
43,658 65,487 109J45 73,359 67.2
Total
(all States) $2,000.000 $3.000,000 $5,000,000 $1,774,487 35.5
Obligations include subsequent adjustments to grants through February 5, 1974,
60
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APPENDIX IV
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON. D.C. 20460
Mr. Henry Eschwege September 27, 1974
Director, Resources and Economic
Development Division
U.S. General Accounting Office
Washington, D. C. 20548
Dear Mr. Eschwege:
Your letter of August 9, 1974, to Mr. Train, requested our
comments on the General Accounting Office's (GAO) report entitled
"Slow Implementation of Federal Water Pollution Control Act Amend-
ments of 1972." The draft has been reviewed by those in EPA having
management responsibilities for the activities discussed in the
report.
Specifically we would like to comment on two
findings as follows:
The report states that because the guidelines were not
available when needed, EPA and the states have issued pollu-
tion discharge permits to industrial dischargers on the basis
of "interim instructions and assessments of control technology
for pollution discharges of individual permit applicants."
Such permits may contain effluent limitations less stringent
than those prescribed in the final guidelines. This is true.
However, in most cases our permits have contained effluent
limitations that are either equivalent to or more stringent
than those prescribed in the final guidelines. This is
because we attempted to apply the same standards used for the
final industrial guidelines on the earlier permits.
[See GAO note p. 62. ]
61
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APPENDIX IV
Although at present all our permits
contain a provision making them subject to modification for
cause—as required by the Act, we oppose modifying the permits
on a regular basis. We are primarily interested in cleaning
the waters and unless industry is assured of the relative
continuity of the permit conditions, they will not proceed
with the implementation of their plans under the threat of
changing requirements and direction. Considering how close
our old permit conditions come to the current versions, we
do not feel that the minor added accuracy is worth the
unquestionable delay of water clean-up.
[See GAO note.]
We are committed to issue substantially all major permits
by December 31, 1974. In those cases where we are unable to
issue them on the deadline, we do not intend to take enforce-
ment action against the applicant, and we intend to discourage
such action from citizen groups. Any citizen action must com-
ply with a 60-day notice provision to EPA during which time we
would assuredly try to issue the permit.
We have a legal opinion from our General Counsel on this
subject which has been transmitted to Congress. It describes
the present state of the law as that, if a discharger has sub-
mitted a timely application for a permit, a court would not
find a discharger in violation of the Act, even after December 31,
1974, for failure to have a permit when the administering agency
has failed to take action on the permit application.
We appreciate the opportunity to review GAO's finding
in draft form.
Sincerely yours,
Alvin L. Aim
sistant Administrator
r Planning and Management
[GAO note: Material related to matters no longer discussed in the
report has been deleted.]
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